Why Tesla (TSLA) Looks Poised for a Solid Q3 Earnings Release

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Tesla TSLA is set to release third-quarter 2021 results on Oct 20, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at $1.35 per share and $13.16 billion, respectively.

The electric vehicle (EV) king surpassed the Zacks Consensus Estimate of earnings in the last-reported quarter on higher-than-expected automotive gross profit. The top and bottom lines witnessed a massive year-over-year growth of 98.1% and 229.5%, respectively.

Over the trailing four quarters, Tesla beat the Zacks Consensus Estimate on three occasions and missed in the other, the average surprise being 26.5%. This is depicted in the graph below:

Estimate Revisions

The Zacks Consensus Estimate for third-quarter earnings per share moved north by 10 cents in the past 30 days. The bottom-line estimate also implies a year-over-year surge of 77.6%. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year rise of 50%.

Earnings Whispers

Our proven model predicts an earnings beat for Tesla this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Tesla has an Earnings ESP of +15.68%. This is because the Most Accurate Estimate of $1.57 per share comes in 22 cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Tesla currently sports a Zacks Rank of 1 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

Courtesy of economic recovery from the pandemic lows and preference for personal mobility, demand for vehicles has been on the rise. Consequently, Tesla delivered 241,300 units in third-quarter 2021, up from 139,539 units delivered in the year-ago period as well as 201,304 units delivered in the prior quarter.

Increasing demand for Models 3 and Y, which form a major chunk of the automaker’s overall deliveries, can be attributed to Tesla’s robust vehicle sales during the quarter. For the quarter in discussion, the Model 3/Y division registered deliveries of 232,025 vehicles, beating the Zacks Consensus Estimate of 219,169 units. The reported figure is way higher than the delivery of 124,318 units of Model 3/Y during the corresponding quarter last year and the 199,409 units delivered in the prior quarter. In fact, the Zacks Consensus Estimate for automotive revenues for the quarter under discussion is pegged at $11,315 million, calling for a year-over-year jump of 54%.

Solar and storage deployments are also expected to have witnessed exponential growth during the quarter, aided by the company’s Solar Roof and Powerwall products. The consensus mark for energy generation and storage revenues is pegged at $740 million, suggesting an increase from the year-ago level of $579 million. The same for revenues from Automotive Leasing & Services and Others is pegged at $343 million and $899 million, indicating year-over-year growth of 29.4% and 54.7%, respectively.

Thus, robust demand for Model 3/Y and stellar performance of the solar arm are likely to have fueled Tesla’s earnings in the to-be-reported quarter.

Other Stocks With Favorable Combinations

Here are some other stocks in the auto space, which, according to our model, also have the right combination of elements to post an earnings beat in the quarter to be reported:

Penske Automotive PAG has an Earnings ESP of +5.24% and a Zacks Rank #3. The stock is set to report third-quarter 2021 earnings on Oct 27.

Sonic Automotive SAH has an Earnings ESP of +8.33% and a Zacks Rank #1. The stock is set to report third-quarter 2021 earnings on Oct 28.

Group 1 Automotive GPI has an Earnings ESP of +2.78% and a Zacks Rank #2. The stock is set to report third-quarter 2021 earnings on Oct 28.

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